Correlation Between LOreal SA and ATEME SA
Can any of the company-specific risk be diversified away by investing in both LOreal SA and ATEME SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining LOreal SA and ATEME SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LOreal SA and ATEME SA, you can compare the effects of market volatilities on LOreal SA and ATEME SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in LOreal SA with a short position of ATEME SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of LOreal SA and ATEME SA.
Diversification Opportunities for LOreal SA and ATEME SA
Average diversification
The 3 months correlation between LOreal and ATEME is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding LOreal SA and ATEME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATEME SA and LOreal SA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on LOreal SA are associated (or correlated) with ATEME SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATEME SA has no effect on the direction of LOreal SA i.e., LOreal SA and ATEME SA go up and down completely randomly.
Pair Corralation between LOreal SA and ATEME SA
Assuming the 90 days horizon LOreal SA is expected to under-perform the ATEME SA. But the stock apears to be less risky and, when comparing its historical volatility, LOreal SA is 2.27 times less risky than ATEME SA. The stock trades about -0.07 of its potential returns per unit of risk. The ATEME SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 558.00 in ATEME SA on November 3, 2024 and sell it today you would lose (143.00) from holding ATEME SA or give up 25.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LOreal SA vs. ATEME SA
Performance |
| Timeline |
| LOreal SA |
| ATEME SA |
LOreal SA and ATEME SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LOreal SA and ATEME SA
The main advantage of trading using opposite LOreal SA and ATEME SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LOreal SA position performs unexpectedly, ATEME SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ATEME SA will offset losses from the drop in ATEME SA's long position.| LOreal SA vs. LVMH Mot Hennessy | LOreal SA vs. Danone SA | LOreal SA vs. Air Liquide SA | LOreal SA vs. Hermes International SCA |
| ATEME SA vs. X Fab Silicon | ATEME SA vs. Eutelsat Communications SA | ATEME SA vs. Odyssee Technologies SA | ATEME SA vs. Jacquet Metal Service |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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